From the high of expectation of the lifting of final lockdown restrictions, we are now into a further month of waiting on data and the continued hoped-for success of the vaccination programme. While the world’s leaders met for the G7 summit in Cornwall in a wave of optimism allied to an upturn in summer weather, the delay of the June re-opening further highlights how far we are still from ‘a return to normal’.
As with the warmer temperatures, however, there are some positive developments. For one thing, as we highlight in the summer edition of our newsletter, markets are looking up. Evidence is pointing to an uptick in dividends and one-off payments to shareholders in 2021 following sharp falls in 2020. Even the worst-case scenario predicts positive change.
Looking further afield, in our feature for this edition we examine inheritance tax (IHT). As house prices continue to rise, and following the Chancellor’s freezing of the IHT threshold for the next five years, increasing numbers of estates will become subject to IHT. Yet more than 50% of adults over 55 in the UK do not have any idea of how their estate will be taxed. While we may not relish looking towards the end of our lives, estate planning can help support your loved ones when you are no longer around. Our article looks at the current inheritance tax rules and how they are likely to change in the near future.
• Tax planning for families – As the freezing of several key tax thresholds heralds a decline in real income over the next five years, we look at ways for couples to maximise the use of tax allowances and reliefs.
• Portfolio rebalancing – Choosing a set of investments for your portfolio may seem like a short-term process, but investments need to be curated and reviewed. Allowing portfolio to coast could mean the erosion of the diversity you thought you had put in place, potentially weakening your position.
• ‘Greenwashing’ warning – As growing numbers of ESG funds promise investors both returns on their money and support for businesses concerned with sustainability and ethical practices, be warned. While legislation takes a while to catch up, you may need to look beneath the surface to check a fund’s credentials.
We are happy to talk you through any of the issues addressed in our newsletter. Our next edition will be with you in the autumn when we will be anticipating the Chancellor’s next moves in the second Budget of 2021.
With Euro 2020 underway (don’t let the date confuse you), the Wimbledon grass renewing its familiar battle with the rain and the Tokyo Olympics apparently still around the corner, we might be forgiven for feeling that everything is already back to ‘normal’. The delayed release of full restrictions, however, coupled with increased cases of the Delta variant mean there is still some way to go. But the curve appears towards optimism as the summer wears on.
That feeling has also reached the financial markets, as we explore in the latest, summer edition of our client newsletter. With the Bank of England lifting its ban on dividend payments, more companies are likely to either reinstate or increase cut pay-outs over 2021.
Our feature looks at the future of inheritance tax. With rising house price and the IHT threshold, already unchanged for over a decade, frozen for a further five years, what once may have seemed a remote tax for the rich is now affecting more and more estates. Yet more than half of over 55s have no understanding of how this tax will affect their assets and consequently their legacy. We look at the current IHT gifting and allowances and consider the changes suggested by two recent reports that the Chancellor could incorporate in the autumn Budget.
Good news for the housing market is the increasing number of people buying second homes. The stamp duty holiday boosted this area of the property market again, with people buying for their own use as well as holiday lets and the wider rental market. There are several ways to manage a property, depending on your requirements, so our story gives an overview of the options.
Of course, many are feeling stretched from the difficult past 18 months and so we highlight options for families to make the most of the tax reliefs and allowances. Sometimes a transfer to a partner or a slight increase to a pension contribution can make a significant difference.
Our next update will come in the autumn, when the second Budget of 2021 will be looming, and we will be bracing for the second wave of Covid-19 repayment plan measures.